T-Mobile (TMUS) Q1 FY26 earnings call: guidance and Q&A

Can you comment on reports of a potential merger with Deutsche Telekom, including the logic, logistics, and potential premium for US shareholders?

Management does not comment on market rumors or speculation. However, hypothetically, any such transaction would require a separate approval process by disinterested shareholders, often referred to as a majority of the minority.

“As a matter of policy, we don't comment on market rumors or speculation, nor is there anything specific to comment on anyway. However, the article has raised a lot of questions inbound on governance. We've looked into the governance. And what I've been told is hypothetically, if someone were to ever consider such a transaction reported in the article, that would specifically require a separate approval process by disinterested shareholders, what many of you refer to as majority of the minority.”

asked by Craig Moffett · answered by Srinivasan Gopalan

Have you observed changes in the bid-ask spread for fiber assets, and how do broadband growth and pricing pressures influence your appetite for future fiber JVs?

Fiber JVs are pursued for equity value creation, not convergence. Each asset is evaluated individually for double-digit IRRs, considering local competitive and pricing environments. The company is not chasing a specific 'homes passed' number but focuses on monetarily sound opportunities that deliver value. Existing JVs are performing as expected.

“The way we think about it is, do we believe that this asset has a strong likelihood of giving us our target IRRs and those are in the double-digit level.”

asked by Samuel McHugh · answered by Srinivasan Gopalan

Can you discuss the competitive landscape in the postpaid market, particularly regarding handset subsidies, and provide an outlook on fixed wireless growth and potential network constraints?

Competition is primarily driven by differentiation (network, value, experience), not just subsidies, though January was competitive. The company is confident in its fixed wireless access (FWA) runway, targeting 15 million customers by 2030 based on existing fallow capacity, without assuming new spectrum or 6G. Leading indicators for capacity and customer satisfaction are positive.

“We said we would get to 15 million customers by 2030 a couple of months ago. Now how did we get to that 15 million? We basically divide the country to almost 36 million hexbins, order of magnitude. And we look at a hexbin level. We forecast the level of wireless traffic. And what is left is really fallow capacity.”

asked by John Hodulik · answered by Srinivasan Gopalan

Please elaborate on the factors contributing to the 3.9% ARPA growth, and what is the trend in postpaid account churn year-over-year, including any intra-quarter improvements?

ARPA growth is driven by rate plan optimizations, increased lines per account, and strong self-selection into premium tiers, with over 60% of new account lines choosing premium plans. Postpaid account churn is structurally higher than line churn due to a greater weighting of new and broadband-only customers, which have higher churn rates. Postpaid phone churn was stable, up 3 bps. Churn typically improves in March, which was observed.

“The simple answer is basically math. Now there's kind of 2 groups of customers who churn more than the average. One is new customers and the second is broadband-only customers. Now the reality is the weighting of these customers in accounts is higher than the weighting in lines.”

asked by Michael Rollins · answered by Srinivasan Gopalan

Could you further explain the inference at the edge opportunity, T-Mobile's competitive advantage, the business model, and potential revenue scale?

The vision involves building compute into the network, creating 'fallow compute' at the edge, which, combined with low latency, presents significant opportunities for physical AI and automation. While too early to size the TAM, estimates are large. T-Mobile's nationwide 5G Advanced network, with innovations for uplink capabilities, provides a multiyear architectural advantage over competitors for supporting edge inferencing.

“So the combination of low latency as well as fallow compute is what makes us excited about the opportunity. It's too early to size TAM. It depends on who you're listening to at any point in time, but all estimates of this market are very large.”

asked by Sean Diffley · answered by Srinivasan Gopalan

Given the embedded inefficiencies of managing multiple fiber JVs, what are the economics, and is there a path towards more scaled deals rather than piecemeal expansion?

Scale in fiber is achieved through a national brand combined with local expertise in deployment. T-Mobile focuses on creating local scale for meaningful economics and is not interested in large-scale deals purely for homes passed or mixed ILEC assets. The strategy prioritizes 'first to fiber' opportunities and is not pursuing cable M&A, aiming to attack incumbents rather than become one.

“Kannan, it just struck me that your reference to large deals potentially was you asking the question I get asked quite often, which is the cable story. And I think I've said this at least a couple of times before, we're not going to go do scale for scale's sake. Specifically, cable is not something we're interested in.”

asked by Kannan Venkateshwar · answered by Srinivasan Gopalan

With the increased capital allocation and recent stock performance, what is the appetite for additional share repurchases? Also, what is the progress on UScellular integration, and when will its churn converge with legacy T-Mobile?

The company will continue to execute share repurchases based on its intrinsic value and discount, adhering to a disciplined capital allocation philosophy. UScellular integration is in the final stages of customer migration, expected to be substantially completed by year-end. UScellular is not a contributor to the previously discussed account churn dynamics, which are driven by broader customer mix.

“UScellular is not a contributor to that. So that behaved exactly like we expected it. This was more kind of weighted average math camp.”

asked by Sebastiano Petti · answered by Srinivasan Gopalan

Given T-Mobile's high-quality service and approximately 20% price discount compared to peers, can pricing parity be achieved over time, and how is the company thinking about long-term pricing?

T-Mobile focuses on ARPA growth rather than fixating on ARPU parity. The company aims to protect its 'best value' position and will make thoughtful 'more-for-more' pricing moves, upgrading customers to newer, better plans. It does not intend to aggressively raise prices to eliminate the 20% discount, believing that maintaining its position of best network, value, and experience drives long-term shareholder value and customer loyalty.

“We don't see a world where we look at a 20% discount and go, let's go whack that pricing up and create a change because we think getting -- titrating the volume and value, making sure that we stay with this position of best network, best value, best experience is what creates long-term shareholder value, long-term customer loyalty.”

asked by Timothy Horan · answered by Srinivasan Gopalan